In CAT-Prone Haiti, Microinsurance Gains Steam

When Hurricane
Sandy struck Haiti late last year, the home Guerda Pierre shares
with her three children and mother in Cabaret, north of
Port-au-Prince, was flooded - and so was the merchandise she
sold to make a living.

PORT-AU-PRINCE, Haiti, Jan 29 When Hurricane
Sandy struck Haiti late last year, the home Guerda Pierre shares
with her three children and mother in Cabaret, north of
Port-au-Prince, was flooded - and so was the merchandise she
sold to make a living.

"The books, the food, everything was wet after Sandy," said
Pierre. The plantain plants and beans in her garden were also
destroyed.

But unlike the majority of Haitians, Pierre had an insurance
policy.

As a borrowing client at Fonkoze, a Haitian microcredit
organization, she was automatically covered under its natural
disaster insurance policy. Through MiCRO (Microinsurance
Catastrophe Risk Organization), she had her existing debt wiped
clean, a new credit account with Fonkoze instated for the same
amount. And she received a payout of about $60 to help her get
back on her feet quickly.

On Tuesday, the International Finance Corporation (IFC), a
division of the World Bank, announced $1.7 million in funding,
plus technical assistance, to support the program.

MiCRO, the first natural catastrophe insurance scheme of its
kind in Haiti, was founded by Fonkoze, the international relief
organization Mercy Corps and a number of other partners after a
devastating earthquake in Haiti in January 2010.

The program was rolled out officially in January 2011, and
all of Fonkoze's microloan clients across the country were
automatically insured - well in time for the hurricane season.

"The objective is to show the feasibility of insurance that
can protect the poor," said Ary Naim, IFC's director for Haiti
and the Dominican Republic.

One of the most weather disaster-prone countries in the
world, Haiti's most vulnerable residents rely on small-scale
farming and are in constant risk of losing their livelihoods.
This can force them to start from zero after each disaster, said
Anne Hastings, CEO of Fonkoze.

It's a dangerous cycle that the Haitian state and its
partners are beginning to address. MiCRO, by offering insurance
as well as training on how to minimize risk, hopes to offer a
partial solution.

According to Olivier Barrau, AIC's chief executive officer,
out of a population of 10 million, less than 300,000 Haitians
have access to any formal insurance product.

"Haiti has the lowest penetration rate for any insurance in
the region," said Barrau. In neighboring Dominican Republic, an
average of $64 is spent per person on insurance annually, while
in Haiti the average is a paltry $3.

While similar disaster micro-insurance schemes exist
elsewhere in the world, Barrau says they don't operate under the
same model as MiCRO.

Fonkoze has some 290,000 clients, and countless others use
their currency exchange and cash transfer services in 46
locations across the country. Some 65,000 female entrepreneurs
are now enrolled in their microloans program, borrowing anywhere
between $25 and $1,200 on six-month loan cycles.

These borrowers pay 3 per cent of their loan value per cycle
to be covered under MiCRO. For Pierre, the sole earner in her
family, the roughly $14 she pays annually for insurance is money
well spent.

MiCRO has its sights set on expansion, including into the
agricultural sector.

Hurricane Sandy struck in late October last year, rounding
out a year that had already pummeled Haiti with heavy rain, wind
and drought. More than $250 million in losses were recorded in
total, and with little or no safety net, more than 2 million
people were plunged into greater food insecurity.

Haiti's natural disaster micro-insurance program was a
"grand experiment," said Hastings. "If it can work here, it can
work anywhere."